ACI Worldwide, Inc.

Hello, everyone. Thank you for joining us and welcome to the second quarter 2026 ACI Worldwide Earnings Conference Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to John Kraft. Please go ahead.

Good morning, everyone, and thanks for joining us. On today's call, we will discuss ACI Worldwide's second quarter 2026 results, as well as our updated financial outlook for the remainder of the year. We will then open the line for your questions. The slides and press release accompanying this webcast can be found at ACIWorldwide.com under the Investor Relations tab and will remain available after the call. As always, today's call is subject to safe harbor and forward-looking statements. You can find the full text of these statements in our earnings materials and SEC filings. Joining me this morning are Thomas Warsop, our President and CEO, and Robert Leibrock, our Chief Financial Officer. Before I turn it over to Tom, I'd like to highlight several upcoming conferences where members of management will be participating. The KeyBank Technology Leadership Forum on August 11th, Seaport Research Partners Annual Summer Investor Conference on August 18, and the FT Partners FinTech Conference on September 15. We look forward to meeting many of you at these events. With that, I'll turn the call over to Tom. Tom?

Thanks, John. Good morning, everyone. As always, I appreciate you joining us for our earnings call today. We'll talk about our second quarter, 2026. And let me start by saying financial performance was strong and the quarter was fulfilling in many ways. In addition to those strong financial results, I want to share a few examples of the things we at ACI are proud of as we continue to deliver on our promises and transform for the future. Let me start with the headline financial results, and then I'll discuss the operational progress driving the momentum we're seeing across the business. Today, we reported 7% revenue growth, 12% adjusted EBITDA growth, and 54% adjusted diluted EPS growth. And we're again raising our full year guidance. Perhaps even more importantly, we continue to make progress on our key strategic initiatives, the things we believe drive long-term growth and shareholder value creation. We signed our first U.S.-based Kinetic customer in the quarter, and we've already signed another in Q3. The traction with Kinetic is a result of our ongoing strategic growth investments and the privileged position we have in the payments ecosystem around the world. We remain well positioned to benefit from the ongoing need for payments modernization. I'm going to discuss this in more detail shortly. Our margin expansion is the result of disciplined expense management while continuing to invest in innovation and returning capital to shareholders. Before I discuss our business segments, I'll spend a few minutes on what's happening in the payments industry. Across financial services, payment ecosystems are becoming significantly more complex. Financial institutions are managing more payment types, more payment rails, increasing real-time payment adoption, rising fraud threats, evolving regulatory requirements, and continually increasing expectations from consumers and businesses. At the same time, many organizations are operating on infrastructure that was designed for a very different payments environment. As a result, modernization has become one of the most important strategic priorities for customers around the world. Increasingly, the discussion is no longer whether institutions will modernize, but how they will modernize and who they will partner with to help them get there. That trend continues to create meaningful opportunities for us at ACI. As I mentioned, one of the most significant accomplishments during the quarter was the signing of our first US-based Kinetic customers. We signed one customer during Q2 and a second customer shortly after the quarter ended. We view these wins as further validation of the kinetic strategy. Customers are increasingly looking to simplify complex payments environments through a modern cloud-native platform that provides connectivity across payment types while positioning them for the next generation of payment intelligence and orchestration. Our kinetic pipeline continues to expand faster than any other solution set. In the biller business, our Speedpay One platform continues to advance, with new customers being implemented on this cloud-native, leading-edge solution. We now have more than 100 customers live on this platform, and our continuing investments are improving performance and flexibility. Our kinetic solution and our Speedpay One biller solution are broadly AI-enabled. meaning we're building AI-powered capabilities directly into the solution from day one. And I've previously mentioned a little bit about how ACI is taking advantage of the potential of AI. But I want to give you a little bit more flavor in terms of how AI is really impacting us and our customers. We're already seeing tangible benefits from these efforts. Here's a few examples. In terms of test automation, our AI mandate analyzer is reducing the time required to interpret payment scheme mandates from two to three weeks to minutes or hours. And that's shifting roughly two weeks of effort earlier in each cycle across schemes and products and creating an incremental person year of engineering capacity over time. And that's just the beginning. In our biller business, AI-supported re-architecture work on one of our common products has reduced the effort by about 50%. That's already saved over 6,000 hours of engineering time. And in customer support, we built a retrofit agent team. So it's a team of agents doing retrofitting work. And that will automate up to 85% of a previously completely manual process, saving approximately 10 hours per week per user with additional benefits and related root cause workflows. That work has already been piloted with a large customer in our European business with broader rollout coming soon. We've integrated AI-powered functionality into products across our portfolio, and this is accelerating. Just a couple of examples. In Kinetic, we've implemented a dynamic, context-dependent, intelligent routing and scoring capability. This enables very fast adjustments to fraud and routing algorithms based upon up to the second information. That is only possible with generative AI and related tools. On SpeedPay 1 in our biller business, we've deployed tools to simplify and accelerate our customers' ability to deploy our standard APIs and to accelerate the customer implementation journey. These are only two of the many solution capabilities we've implemented, which are powered by AI. I do want to comment briefly on each of our operating segments. Obviously, Bobby will cover more detail. Let me start with payment software. Payment software continued to perform well during this quarter. The segment delivered 9% revenue growth, driven by strength in issuing and acquiring, where revenue increased 37%. Encouragingly, we're seeing customers move beyond evaluating modernization initiatives and increasingly begin executing against them. As transaction volumes continue to grow and payment environments become more complex, customers increasingly view ACI as a strategic technology partner rather than simply a software provider. Our merchant and anti-fraud solutions both grew in the mid single digits, and both solutions are well positioned to benefit from some interesting new AI, which is driving new technology opportunities and tools. And that includes a new collaboration with some of our merchant clients, where we have created an agentic commerce solution that can be used both by consumers making a purchase and by our customers' agents who are assisting consumers. So we're playing both sides of that opportunity. In our biller segment, revenue increased 5% during the quarter. While year-over-year comparisons in Q2 were challenging, following unusually strong volumes last year, as well as some unique margin benefits that did not recur, the underlying health of the business is strong. We continue to see growing adoption of our Speedpay One platform through expansions across our installed base and success with new customer wins. We remain confident in our expectation for upper single digit growth in Biller for the full year. We're also continuing to execute our balanced capital allocation strategy. We deployed approximately $41 million of capital to share repurchases in Q2, and that brings our year-to-date repurchases to approximately $107 million. As we previously communicated, we expect to allocate between 50% and 60% of operating cash flow to share repurchases during 2026. At this level, we will maintain flexibility for further organic growth investments and potential strategic acquisitions. particularly focusing on those that accelerate our cloud-based payments modernization offerings. As we've said before, driving a superior return on capital deployed is a core tenant of our leadership team and a strategic imperative for our business. We take this capital stewardship seriously. As a part of this disciplined effort, our corporate development team regularly evaluates inorganic opportunities across a full spectrum of strategic actions, including opportunistic acquisitions, divestitures, and partnerships. There are some interesting technologies in the marketplace that could help accelerate our growth, and the valuations are more attractive than they've been in the recent past. Evaluation of those opportunities occurs in the normal course of business for us. And I'm sure you understand that I will not comment directly on any recent speculation about us in the news. To be clear, our business is operating from a place of financial and competitive strength, positioning us to further establish ACI as a platform for profitable growth over time, consistent with our proven track record as a value compound. I'm pleased with our execution in the first half of the year, and I remain encouraged by the strength of our pipeline, which gives us confidence we are on track for a strong finish to the year. Our recurring revenue profile, strong customer relationships, ongoing technology investments, and disciplined cost management have us well-positioned to continue delivering profitable growth. This strategic framework, combined with our shareholder-focused, returns-based capital employment strategy, positions us well to continue to create long-term shareholder value. I want to thank our employees around the world for what they do every day. Their dedication to our customers and their commitment to operational excellence are what makes our success possible. I also want to thank our customers for their partnership and our shareholders for their continued trust and support as we execute on our long term value creation strategy. With that, I'll turn it over to Bobby.